Economic Reforms in India 1990 2008
Economic Reforms in India 1990 2008
Economic Reforms in India 1990 2008
Contents
Why economic reforms?? Factors ob!ecti"es - #eforms Foreign $n"estment % Policy #eforms Foreign &rade '(change Policy #eforms $nd)strial reforms P)blic sector reforms Financial Fiscal reforms *ocial reforms Agric)lt)ral reform Po"erty +ealth 'd)cation concl)sion
condition
5-6 8omestic Factors / $ncrease in fiscal deficit 1 8eficit in c)rrent acco)nt increase in foreign debt 7 -4P crises 9 Monitoring inflationary press)re : ;nsatisfactory performance of p)blic sector
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$nd)strial Policy
4b!ecti"es of $nd)strial Policy-/00/
/ *elf #eliance 1 *o)nd policy Framework 7 8e"elopment of *mall sector 9 Foreign $n"estment &echnology collaboration : Abolishment of Monopoly < #ightf)l #ole to P)blic sector > Protection of $nterest of 3abo)rers
/?'(ploitation of nat)ral reso)rces 1?&echnological .ap 7?-4P s)pport 9?;ndertaking the $nitial #isk
Foreign &echnology Agreement Foreign $n"estment Promotion -oard 5F$P-6 Foreign $n"estment $mplementation A)thority 5F$$A6 'nhancement of Foreign '=)ity in '(isting Companies $n"estment in /@@A '4;s B 'PCs Foreign $n"estment in &rading companies 4pening of 3iasonB-ranch office Foreign $n"estment in *** ;se of Foreign -rand 2ame #epatriation of Foreign Capital &a(ation
*** prod)cers of life sa"ing dr)gs All additional licenses granted to '(port ho)se stand abolished ;nlisted 4.3 stand abolished allowed to import thr) #ep ro)te Ad"ance licensing for imports for e(ports remain open All $mport licensing for capital goods raw materials ha"e been remo"ed grad)ally Financial $nstit)tions ha"e also been allowed to trade '(im scrips &he r)pee was e(pected to f)lly con"ertible on &rade acco)nt in 7 to : years
Fiscal reforms
*implification of ta( policy was anno)nced c)stom d)ty red)ced from //@A in /00/ to
/1?:A in 1@@< '(cise is now le"ied as DA& Corporate ta( was bro)ght down to 7@A $ntrod)ction of F#-M $2 1@@9 state le"el sales ta(es to the DA&
/009 hence gi"ing f)ll freedom to banks to determine lending rates for loans abo"e #s 1 lakh? Foc)s is on soft interest rate regimeE increasing operational efficiency and technological )pgradation?
8ereg)lation of credit
-egan in mid /0F@s intensified in /00@s &o e(pand the pool of lendable reso)rcesE
rationaliGation of priority sector re=)irements and rela(ation of balance sheet restrictions to impro"e the credit deli"ery system?
-anking sector
#ed)ction in *3# and C##E transparent
g)idelines for entry and e(it of p"t? *ector banksE p)blic sector bks ha"e been allowed direct access to capital marketE reg)lated interest ha"e been simplified? &o increase financial "iability of banksE increase a)tonomyE greater entry to pri"ate sector bankingE liberaliGing capital marketsE operational fle(ibility and competition and impro"ing financial health of banks?
Co-operati"e banks
2o significant impro"ement has been obser"ed
in either in stability or efficiency parameters #eform process started m)ch later than the commercial banking sector *tate co-operati"e and district co-operati"e banks inc)rring losses t)rned aro)nd and made some profits?
lendingE loans against g)arantees e(tended by banks With a "iew to ha"e an integrated "iew of the operations of financial instit)tions and commercial banks and to pro"ide more comprehensi"e basis for the cond)ct of monetary and credit policies
commercial banks were e(tended to 2-FCs? Penalties for non s)bmission of periodic ret)rns to #-$ as well as cancellation of certficate of registeration of 2-FCs?
commercial banks were e(tended to 2-FCs? Penalties for non s)bmission of periodic ret)rns to #-$ as well as cancellation of certficate of registeration of 2-FCs?
$ns)rance sector
4pening )p of ins)rance b)siness to pri"ate
participation $#8A actE /000 &o deepen ins)rance penetration by enlarging cons)mer choices thro)gh prod)ct inno"ation? F8$ )p to 1<A allowed
$-A withdrawn in /0F0 &he 8F+$ was set )p to participate in call money market both as borrower and lender 2ew financial instr)ments s)ch as inter bank participation certificatesE certificate of depositE commercial papers and repos F)ll fledged li=)idity ad!)stment facility was introd)ced on !)ne :E 1@@@ CC$3 was set )p in 1@@1
Capital market
Co?swere gi"en freedom to price their iss)es
)nder capital iss)es control act /09> 'lectronic trading system A8#s and .8#s and 'C-s F$$s in capital market
/?'ns)re rapid economic growth ind)strialiGation of the co)ntry 1?'arn ret)rn on in"estment 7?promote redistrib)tion of income and wealth 9?to create employment opport)nities :?balanced regional de"elopment <?de"? 4f small scale and ancillary ind)stries >?sa"e and earn foreign e(change for economy
acco)ntability Changes in management in specific enterprise &echnological )p gradation 8isin"estment and pri"atiGation
acco)ntability Changes in management in specific enterprise &echnological )p gradation 8isin"estment and pri"atiGation
*ocial sector
Agriculture
Partial decontrol of fertiliGer prices #emo"al of bottlenecks in agric)lt)ral marketing #ela(ation of restrictions )nder the essential
commodities actE /0:: $ntrod)ction of forward trading in important commercial crops #eplacement of the re"amped p)blic distrib)tion system with targeted p)blic distrib)tion system 'stablishment of r)ral infrastr)ct)re de"elopment f)nd #eplacement of =)antitati"e control tariff
Po"erty
2ational food for work programme #)ral employment generation programme Hai prakash roGgar g)arantee yo!ana Hawahar gram samridhi yo!na *warna !ayanti gram swaro!gar yo!ana 2ational social assistance programme 'mployment ass)rance scheme Pradhan mantri gramodaya yo!ana
;nemployment
2ational r)ral employment programme #)ral landless employment g)arantee programme *cheme of training r)ral yo)th for self-employment Hawahar ro!gar yo!na A faster and geographically di"ersified growth of
agric)lt)re 8e"elopment of infrastr)ct)re and marketing Arrangements for agro-based acti"ities .reater attention to the needs of the small mfg sector as a ma!or so)rce of ind)strial growth #e"amping of training systems to introd)ce greater fle(ibility to labo)r market trends
concl)sion
Ascended a higher growth path so far $ndians ha"e fo)nd a new le"el of self-
confidence as respect for india has increased? Miles to go b)tIsecond generation of reforms m)st foc)s on a similar empowerment of p)blic sector ? We are in the midst of economic reforms and need to mo"e to the ne(t le"el of s)stained growth?
#eferences
2ew $ndian 'conomy
#eforms-K?3? .)ptaE
+ar"inder Ka)r $ndian Financial *ector- 2iti -hasin $ndiaJs 'conomic #eforms % Di!ay HoshiE $?M?8? 3ittle $mpact of #eform process on $ndian 'conomy8r? -abita Agrawal $ndian 'conomy- 8att *)ndaram #eser"e bank of $ndia -)lletine-1@@<